Analysis: The Disney-Miramax split

LOS ANGELES, Oct. 15 (UPI) -- The coming split between The Walt Disney Co. and Miramax is, no doubt, a complicated affair, but at bottom it is most likely a consequence of the increasingly corporate nature of the entertainment industry.

Among the complicated aspects of the deal is an apparent misunderstanding about whether Disney will part ways with Miramax, or just with its principals, Harvey and Bob Weinstein. The Burbank, Calif.-based conglomerate seems to be ending its relationship with the Weinsteins but planning to retain control of Miramax.

Disney has not yet said formally whether it plans to renew its deal with the brothers when it expires Sept. 30, 2005. There have been widespread reports in Hollywood, citing insider sources, that the decision has already been made to disassociate Disney from the Weinsteins, but Disney is not required to commit itself until next March, when it must give the Weinsteins six months' notice if it does not intend to renew the current deal through 2009.

Disney is not commenting on the speculation, and Miramax spokesman Matthew Hiltzik issued the briefest of statements.

"Bob and Harvey are hoping for an amicable resolution that will allow them to continue to be productive members of the Disney family," said Hiltzik.

It is fashionable in Hollywood to blame the breakup of the two companies' 10-year relationship on ill will between the Weinsteins and Disney Chief Executive Officer Michael Eisner. The animosity is genuine, by all accounts, but the business decision appears to rest firmly on more business-like issues having to do with operating budgets, compensation and the degree of autonomy that Disney is willing to let the Weinsteins have in running the company they founded in 1979.

In his book "Down and Dirty Pictures: Miramax, Sundance, and the Rise of Independent Film," Peter Biskind called the Weinsteins major forces in the development of the independent-film movement and described the process by which Disney acquired Miramax in 1994. A significant part of the business arrangement was that Disney agreed to afford the brothers an unusual degree of autonomy while keeping a relatively tight rein on budgets.

The Weinsteins displayed a knack for acquiring independently produced pictures at bargain prices and then marketing them effectively to turn profits. They also developed a penchant for the high profile -- guiding such pictures as "Chicago," "Shakespeare in Love" and "The English Patient" to Best Picture Oscars.

Along the way, they also rewrote the rules for Oscar campaigning -- literally. It is a generally accepted fact of life in Hollywood that the Weinsteins raised the stakes on awards season campaigning and that the intensified politicking led to recent changes in Academy of Motion Picture Arts and Sciences rules governing Oscar campaigns.

Miramax has not offered a particularly ambitious slate of films this year, but in 2003 the company had its biggest year at the box office, grossing more than $1 billion and earning a reported $200 million in profits. However, media analyst Dennis B. McAlpine of McAlpine and Associates told the Los Angeles Daily News that there is a question of whether the enterprise is profitable for Disney.

"Miramax has been the division that generates all the Oscars, but it's debatable whether it makes any real money for Disney," McAlpine said, "and obviously that's an important factor moving forward."

According to a recent report in Daily Variety, a major point of contention between Disney and Miramax has been a clash between the company's corporate culture and the Weinsteins' less structured approach to doing business. A producer told the paper that her longtime relationship with Miramax was nothing like the cool, professional atmosphere of the Disney corporate suites.

"You fight, you don't speak, you go out to dinner, and you make up," said the producer. "You won't get a blank stare. If you're passionate enough, and you fight hard enough, you'll find a good compromise. It's immediate, specific and never boring."

Whether or not Disney continues to operate Miramax as a production and distribution arm, the conglomerate will retain rights to the Miramax library -- a catalogue that includes "Pulp Fiction," "Kill Bill, Vols. 1 & 2," and the recent big-budget pictures "Gangs of New York" and "Cold Mountain."

The Weinsteins would be free to work for other Hollywood studios. Harvey Weinstein, in particular, has often mused about being seen as an old-school mogul, but Biskind recently told the BBC that Weinstein may lack the temperament to produces and develop movies in the same manner as the old titans of Hollywood.

"You know, there's no question that he was very successful as an acquirer, and he has developed some films that have done well," said Biskind. "But ... he's too impetuous and he's too impatient to really develop."

Biskind also said Weinstein is too unwilling to spend money on development that studios do.

"And that was, in a way, one of the advantages of the old business model, that they didn't have to develop," he said. "But I think those days are over."

If and when the Weinsteins do strike out on their own, they will have some money to work with. When Disney refused this spring to allow Miramax to release Michael Moore's "Fahrenheit 9/11," the brothers personally acquired all rights to the movie. It went on to earn $119 million at the U.S. box office and is currently a best-selling DVD.

Variety speculated that the Weinsteins would be able to create a new entity with little or no difficulty, but a Miramax insider insisted that the brothers would much rather stay with Disney -- largely because a new venture would pale by comparison with what they created before and during their association with Disney.

Whatever the Weinsteins do, they will be doing it in an entertainment-industry environment that they are largely responsible for having created -- a world in which every major studio has a division that either produces or acquires independent films.

Biskind called it "Indiewood."

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